✍️🆕 New Tariffs, Job Slowdown, and Recession Risks—Here’s What to Know

Happy Wednesday all,

Wall Street is signaling growing concerns about a potential economic downturn, with recession probabilities climbing and private-sector hiring slowing. At the same time, President Trump’s sweeping tariffs are shaking industries, raising inflation risks, and adding to market uncertainty. Will tariffs and tax cuts spark the investment boom the administration is hoping for, or are we headed for a prolonged slowdown?

Let’s break it all down.

Enjoy this week’s Hump Days!

- Humphrey & Rickie

👀 Eye-Catching Headlines

Apple unveils new MacBook Air models with $100 price cut despite tariffs (CNBC)

Scale AI announces multimillion-dollar defense deal, a major step in US military automation (CNBC)

Trump Suspends Intelligence Sharing With Ukraine (WSJ)

7 Takeaways From Trump’s Speech to Congress (WSJ)

BlackRock Strikes Deal for Panama Ports After US Pressure (WSJ)

Trump Administration Readies Order to Bolster US Shipbuilders, Punish China (WSJ)

US Mortgage Rates Near Three-Month Low in Boost to Demand (BBG)

The Weekly Brief

Wall Street Warns Markets Are Flashing Rising Recession Risk

• Wall Street is flashing warning signs about recession risks, with market-implied probabilities climbing significantly in recent months.

  • JPMorgan's model now shows a 31% chance of economic downturn (up from 17% in November), while Goldman Sachs puts it at 23% (up from 14% in January).

• The growing concern follows President Trump's new tariffs affecting Canada, Mexico, and China, combined with disappointing economic data showing factory activity approaching stagnation, declining consumer confidence, and decreased personal spending.

• Despite these worrying signals, the picture isn't entirely bleak. The unemployment rate remains low at around 4%, income metrics show strength, and many economists point out that much of the negative data comes from surveys rather than hard economic numbers.

  • Commerce Secretary Howard Lutnick has also hinted at possible tariff relief for Mexico and Canada, which could ease some market concerns.

US Firms Add 77,000 Jobs, Smallest Gain Since July

• Private-sector hiring in the US slowed significantly in February, with only 77,000 new jobs added compared to 186,000 in January, according to ADP Research.

• This was the lowest hiring pace since July, falling below nearly all economist forecasts. The slowdown was concentrated in the services sector, particularly in trade, transportation, utilities, education, and healthcare.

  • Wage growth remained relatively stable, with job-changers seeing a 6.7% increase and job-stayers seeing a 4.7% gain.

US Growth Risks Piling Up As Tariff Fears Widen

• President Trump's new wave of tariffs—the largest American protectionism move since the 1930s—is raising serious concerns about economic slowdown.

  • The administration has implemented duties on $1.5 trillion of imports (over 40% of total US imports), primarily targeting Mexico, Canada, and China, with threats to expand to the EU, autos, pharmaceuticals, and semiconductors.

• Economists estimate these trade measures could reduce GDP by 0.65-1.3% while pushing inflation up by 0.8%, creating what some analysts warn could be stagflation conditions.

• Some sectors are already feeling some pain… Retailers like Target are already warning about higher prices, especially on Mexican produce like avocados and strawberries. Meanwhile, the auto industry (2.5% of the economy) faces severe supply chain disruptions due to its deep integration with Canada and Mexico.

• While the administration acknowledges some short-term "disturbance," it maintains that tariffs, deregulation, and tax cuts will ultimately drive an investment boom and "rebalance the economy" toward Main Street.

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